Costs of unpaid student loans could 'exceed income raised by increase in tuition fees'

 

The costs of unpaid student loans could eventually exceed the income raised by the increase in university tuition fees, government figures show.

The point at which the tuition fee rises in England and Wales is cancelled out is calculated by experts to be when 48.6 per cent of graduates earn too little to repay their loans.

According to a written parliamentary answer from the Universities Minister, David Willetts, the Government believes that 45 per cent of graduates will fail to earn enough to pay back the money they were loaned.

By contrast, when the Government was working out the impact of the tuition fee rises, it worked on the basis that just 28 per cent of loans would not be repaid in full.

The figures are based on long-term projections which could change but erode will confidence in ministers’ justification for introducing the controversial tuition fee rises soon after the Coalition was formed.

The rise, arguably the most controversial and electorally toxic policy of the Coalition, meant that from 2012 students going to university faced having to pay tuition fees of up to £9,000 each year, a huge increase from the £3,000 annual maximum until then.

Nick Clegg and the Liberal Democrats were widely condemned for what many people, especially those of student age, perceived to be a betrayal. In the Party’s manifesto there had been a pledge to oppose tuition fee rises.

Part of the reason for unpaid loans getting so close to outstripping the extra income generated by the hiked fees is that one of the concessions during negotiations was a decision to increase the minimum annual income level of students from £15,000 to £21,000 before they would have to start paying back what they borrowed.

A spokeswoman for the Department for Business, Innovation and Skills said: "The principal aim of our reforms was to put higher education on a sustainable footing for the long-term.

“Our universities are now well-funded and this is driving up the quality of the student experience and helping to stimulate economic growth. We are also protecting those on lower incomes and those from poorer backgrounds are applying in record numbers.

“The RAB charge is an estimate based on a prediction of economic circumstances some 35 years in the future. Estimates can and will continue to change.”

Liam Byrne, Labour's shadow Universities Minister, told the BBC: "What today's figures show is that the government tripled fees, put students in thousands of pounds of new debt but the system now costs practically the same as the old system because so few students can afford to ever pay their debts back.

"It is clear we have built the student finance system on top of a money pit. I am afraid it can't go on and we now need a debate about how we are going to pay for higher education and the nation's universities in the decade ahead."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Web Developer - Junior / Middleweight

Negotiable: Recruitment Genius: One of the South East's fastest growing full s...

Guru Careers: Marketing Manager / Marketing Communications Manager

£35-40k (DOE) + Benefits: Guru Careers: We are seeking a Marketing Communicati...

Recruitment Genius: Commercial Engineer

£30000 - £32000 per annum: Recruitment Genius: Estimating, preparation of tech...

Recruitment Genius: IT Support Technician

£14000 - £17000 per annum: Recruitment Genius: You will work as part of a smal...

Day In a Page

Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

The ZX Spectrum is back

The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

Even the screenwriter pours scorn on Grace of Monaco biopic

The critics had a field day after last year's premiere, but the savaging goes on
Menstrual Hygiene Day: The strange ideas people used to believe about periods

Menstrual Hygiene Day: The strange ideas people once had about periods

If one was missed, vomiting blood was seen as a viable alternative
The best work perks: From free travel cards to making dreams come true (really)

The quirks of work perks

From free travel cards to making dreams come true (really)
Is bridge the latest twee pastime to get hip?

Is bridge becoming hip?

The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
Long author-lists on research papers are threatening the academic work system

The rise of 'hyperauthorship'

Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

The rise of Lego Clubs

How toys are helping children struggling with social interaction to build better relationships
5 best running glasses

On your marks: 5 best running glasses

Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

'Ben Stokes gives everything – he’s rubbing off on us all'

Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada